The Palm Oil Industry

The true cost of your weekly groceries.

The Palm Oil Industry

Palm oil is an ingredient which most of us consume without even realising. A form of vegetable oil derived from the oil palm tree grown on plantations in the tropics (notably rainforests in South East Asia), demand for it is growing, and fast. Compared to the year 2000, demand for palm oil is predicted to more than double by 2030 and to triple by 2050.

Not only is this call for palm oil having a profound effect on the environment, but it is also driving the survival of one of our closest natural relatives to extinction. The thick, dense rainforests of Borneo in Indonesia have been identified by the UN Environment programme as the Orangutan’s natural habitat. The international trade in palm oil is a key driver in the demolition of this rainforest.

Over the last ten years, vast areas have been cut down and burned to make way for oil palm plantations. To put this into perspective, in Indonesia an area of forest the size of six football pitches is cut down every minute. Much of the land clearance is carried out by migrant labourers who regard the Orangutan as a pest and the animals are shot at, burned, sometimes sold on to the pet trade and sometimes left for dead. In recent years 50,000 Orangutans have died as a result of deforestation and experts predict that this species will become extinct in as little as 10-20 years. The Orangutan has no natural predators and yet the population in Borneo has declined by over 50% in recent decades.

In addition, the palm oil industry commits human rights abuses on a massive scale. In some instances, indigenous people have has their land stolen from them and given to companies for the development of oil palm plantations. Violent conflict is commonly associated with land theft. Plantation work in South East Asia often pays at below the minimum wage, is insecure, dangerous and involves unpaid work by workers’ relatives in order to meet production targets, and bribery and corruption are rife.

A report published in 2008 by Friends of the Earth stated that pollution from pesticides, fertilisers and the pressing process is leaving some Indonesian villages without clean water: *"The unsustainable expansion of Indonesia's palm oil industry is leaving many indigenous communities without land, water or adequate livelihoods. Previously self-sufficient communities find themselves in debt or struggling to afford education and food. Traditional customs and culture are being damaged alongside Indonesia's forests and wildlife."* It also claims that oil palm companies often use violent tactics as they move in to convert the land to plantations. *“Human rights including the right to water, to health, the right to work, cultural rights and the right to be protected from ill-treatment and arbitrary arrest are being denied in some communities.”


The environmental impact is enormous. Associated with oil palm production is widespread use of illegal chemicals, which pollute land and water. Oil palm plantations feed a growing global demand for cheap vegetable oil used in the production of biodiesel. To feed this demand, Indonesian peatlands are being torn up for oil palm plantations. Carbon emissions from peatlands degradation are already highest in Indonesia and the biofuels industry is expanding rapidly. Indonesia has 6 million hectares of oil palm plantations, but has plans for another 4 million by 2015 dedicated to biofuel production alone. Commitments from various governments to increase the amount of biofuels sold are pushing this rise in demand, because they're seen as a quick fix to reduce greenhouse gas emissions. By 2020, 10 % of fuel sold in the EU will be biofuel. However, the irony is that these attempts to reduce the impact of climate change could actually make things worse - clearing forests and draining and burning peatlands will release more carbon emissions than burning fossil fuels: up to 1.8 billion tonnes of greenhouse gases every year. Indonesia's peatlands cover less than 0.1% of the Earth's surface, but are already responsible for 4% of global emissions every year.

This phenomenal growth of the palm oil industry spells disaster for local communities, biodiversity, and climate change as palm plantations encroach further and further into forested areas. So what can we as consumers, do? Are we playing an unwitting part in this continuing destruction? The answer is yes. Palm oil is found in about one in ten of the goods we buy from supermarkets, including chocolate, biscuits, sweets, muesli and even soap, toothpaste and cosmetics such as lipstick. Even the greenest consumer can’t avoid products with palm oil in them, not least because it is often listed as vegetable oil on product labels.

However, experts warn that the answer is not to boycott palm oil. This would be impossible and even irresponsible, as it wouldn’t help communities who are already struggling to live on less than a living wage. A replacement oil would need to be found. Rather, the answer is to put pressure on manufacturers and retailers to seek a sustainable source of palm oil and in turn create an industry which is regulated and free of abuse.

Industry efforts to bring deforestation under control have come through an organisation called the Roundtable on Sustainable Palm Oil (RSPO). Set up to establish clear ethical and ecological standards for producing palm oil, many of Europe’s major consumer goods manufacturers and retailers have been members for several years, including high-street names like Unilever, Cadbury's, Nestlé and Tesco, as well as palm oil traders who together represent 40 % of the global palm oil trade. Their principle objective is ‘to promote the growth and use of sustainable palm oil through co-operation within the supply chain and open dialogue between its stakeholders’.

These companies claim that they want to ensure that they can buy palm oil produced without the destruction of rainforests. The food industry appeared to be responding to pressure to use a sustainable palm oil and said it would as soon as one became available. The World Wildlife Fund gladly backed them. A year ago, the first load of "sustainable" palm oil, certified as coming from land not recently deforested, became available. The growers were doing what their purchasers had been demanding. However sadly, forest destruction has continued. It would appear that supermarkets won’t put their money where their mouth is.

The reason for this? Sustainable oil commands a premium price which they are not prepared to pay (despite charging consumers a premium price for ‘green ‘products). The World Wildlife Fund has produced a ‘scorecard’ to show levels of ‘sustainability’ for the 59 leading European retailers and manufacturers buying palm oil. The results are shocking. Waitrose, Lidl, Boots and Danone are some of the worst culprits – none of these businesses are buying any sustainably produced palm oil according to WWF, which has given all the listed companies a chance to correct the findings. Top marks would be 29 and all of these companies score lass than ten. Higher scorers are Sainsbury's and Marks & Spencer (scoring 26 and 25.5 respectively) but even these high scorers are using palm oil in ‘very small quantities’ according to the WWF.

Many manufacturers and supermarket chains have made commitments to sourcing 100% sustainable oil by 2012, or 2015, or at best in the next twelve months. But is this good enough when we know it’s available now?

It would appear that many RSPO members are taking no steps to avoid the worst practices associated with palm oil production, whilst actually risking creating the illusion of sustainable palm oil, justifying the expansion of the palm oil industry. It rather begs the question: by the time these retail giants meet their commitments, will there be any rainforest left to protect?

**Written by:** Carine Seitz